The announcement comes as G-20 leaders gather in Pittsburgh to craft a new framework for global economic policymaking in the wake of the worst financial crisis since the Great Depression.
“It’s a reflection of the world today,” a White House official told the Wall Street Journal on Thursday. “It’s basically pulling international cooperation into the 21st century.”
The G-20, whose membership ranges from China to to Saudi Arabia to South Africa, accounts for approximately 85 percent of the world’s gross domestic product. Under the new framework, the G-8 – which consists of the United States, Britain, Canada, France, Germany, Italy, Japan, and Russia – will meet primarily to discuss topics such as international security.
The G-20 will push to improve international economic policy by reducing the world’s reliance on U.S. consumers, and boosting domestic demand in China, according to officials interviewed by the WSJ. Additionally, the G-20 will move to trim U.S. borrowing from abroad while encouraging more investment from Europe.
Shifting power from the G-8 to the G-20 has been a priority for President Barack Obama, who has questioned the G-8’s suitability for confronting the world’s economic challenges. Aides to the president characterized the most recent G-8 meeting in July as little more than a way station between G-20 meetings, according to the New York Times.
“We view this meeting and this discussion as a midpoint between the London G-20 summit and the Pittsburgh G-20 summit,” Mike Froman, the president’s chief negotiator, told the NYT at the July meeting of the G8.
In addition to announcing a new framework for global policymaking, G-20 leaders are expected to use the Friday finale of the Pittsburgh summit to introduce a range of other economic policy aims. Among those goals are a more aggressive approach to dealing with tax havens and possible guidelines for executive pay and capital requirements for the world’s biggest banks.